CASE # 1 American Home Products Corporation study

Shizhe LiTeam3Oct.4,2011CASE#1American Home Products CorporationAmericanHomeProductsCorporation hasleading companyofPrescription drugs,packaged drugs,food products,and housewareandhousehold products.Sine Laporte,who ischief executive,hastaken chargeof AHP,company startedits veryfew debtandgrowing cashreserves.The casepresents threealternativestrategies:1Company keptreticence atcommunicability.2Frugality andtight financialcontrol to keep profitgrowing.3Conservatism andrisk-aversion atits productdevelopment toreducespending anddebt.In analyzingall ofthe variousfacts andissues presentedin thecase,I believethat themost criticalissues are:1AHP hasthe sizablemarket share,which couldallow thecompanytokeepreticence andconservatism atits productsdevelopment.AHP didntneed spendingat introducingto newmarket.2The drugsindustry alwaysproduces thesame componentproducts.So thatAHP wouldntspend indevelopment untilothercompetitors developednew products,this strategywouldhelp AHPreduced costsand increasedprofits.3AHP hasthe uniquetop managementstrategy tokeep itspolicywould beexecutive exactlyby Laporteand AHPwas showingthestable andconsistent growthby sales,earnings anddividendsfor29consecutive yearsthrough

1981.Its excellentfinancingperformance hashelped itsstock becamemostpopular oneand benefitedits marketreputations andmarketsales,which increasedprofits atthe end.4AHPs diversifiedoperations,it becamemore competitiveamongits competitors.AHP keptits leadingposition dueto itssuccessfulstrategies.。